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-BOE FPC: Spreads Narrow On High LTV Mortgages; Below Pre-Crisis Levels
     By David Robinson
     LONDON (MNI) - The Bank of England Financial Policy Committee 
debated the case for raising the countercyclical capital buffer (CCyB) 
at its 12 March meeting, with arguments over whether to tighten 
immediately or wait until June, the minutes revealed. 
     Raising the CCyB would be de facto tightening of policy, aiming to 
strengthen bank capital in relatively benign times to protect against 
risks ahead. The CCyB is currently at 1% but the minutes said that 
arguments were advanced for raising it immediately. 
     The minutes said that financial stability risks had increased since 
the CCyB was set at 1% and that policy should be forward looking. 
     "Waiting for a more marked evolution in domestic risks before 
acting could result in a need to consider sharper adjustments to the UK 
CCyB rate, which would likely carry larger economic costs," the minutes 
said. 
     In the end the FPC delayed raising the CCyB and said that risks in 
specific areas could be tackled through more targeted action and there 
were benefits in waiting and seeing how things evolved in coming months. 
     It stated it would review the level of the CCyB in June. 
     On mortgages the FPC noted that there had been a gradual loosening 
in credit and that there had been a tightening in spreads between the 
high loan-to-value (LTV) and lower LTV mortgages. The spread between 90% 
LTV and 75% LTV mortgages had narrowed 34 basis points since the start 
of 2016. 
     The FPC noted, however, that the volume of very high LTV ratio 
mortgages remained below pre-crisis levels with relatively weak 
aggregate demand for mortgages. 
     [TOPICS: M$$BE$]